NIKE PUTS FOGDOG DEAL IN FOCUS
Byline: Rosemary Feitelberg / with contributions from Thomas Cunningham
NEW YORK — Despite signing a partnership with Fogdog Sports, an online retailer that specializes in the athletic market, Nike chairman Philip H. Knight doesn’t expect the company’s e-commerce business to become “meaningful” for three or four years.
During a conference call with reporters Monday, Knight said it will take that long for the business to strengthen.
“Anyone who is expecting a bump in earnings from this deal isn’t looking at it right,” he said.
Under the six-month deal, Fogdog, a Redwood, Calif.-based company, will be the only online retailer to distribute Nike merchandise.
Nike products will continue to be sold online by Foot Locker, Lady Foot Locker, Nordstrom, The Finish Line, Just for Feet and Dicks, which are key retail accounts that have their own web sites. Nike will also continue to be sold on its own web site.
Knight declined to project Nike’s first-year sales via Fogdog, or how sales will break down in terms of apparel and footwear. Nike’s sales of shoes-to-clothes is generally 2 to 1 in units, but it remains to be seen whether that figure will vary on Fogdog, he said.
Fogdog, a three-year-old company, has estimated annual sales of less than $10 million. Nike was impressed with Fogdog’s initial success, its focus on performance products and its aggressiveness, Knight said. He declined to say which party approached the other.
As part of the deal, Nike will acquire 12 percent of Fogdog’s shares. Fogdog filed for a public stock offering Friday. Other financial terms of the agreement were not disclosed.
Tim Joyce former vice president of global sales at Nike joined Fogdog as president earlier this month.
Fogdog will offer a full range of Nike merchandise including activewear, footwear, accessories and sporting goods. The company previously offered Nike goods from other retailers’ excess inventory and other channels.
The online retailer aims to offer as much of the Nike line as possible, according to Tim Harrington, ceo of Fogdog, who fielded questions with Knight during Monday’s conference call.
But Knight cautioned that it has not yet been determined exactly what will be offered. Fogdog’s home page now flags its deal with Nike. It also offers visitors a peek at its Nike ACG (All Conditions Gear) concept shop. ACG is performance-oriented merchandise geared for outdoors enthusiasts.
Fogdog shoppers can browse by sport or category. The company’s women’s shop is currently being renovated and visitors are encouraged to notify Fogdog of any items they currently can’t find on the site, as well as any merchandise they would like to see.
In addition to Nike, Fogdog offers Adidas, The North Face, Moving Comfort, Speedo, Asics, Brooks, Lowe Alpine and other women’s activewear labels.
Knight said he did not expect any “adverse reactions” from retailers in response to Nike’s latest venture.
“By no means does this undercut the good ones,” he added.
About a year ago, Nike realized the Internet would become a “significant” part of the business and took steps to deal with that, he said. At that time, the company hired Mary Kate Buckley as vice president and general manager of Nike.com, and began speaking with potential online partners.
In other e-commerce news, Global Sports Inc., a Philadelphia company that manages sites for sporting goods retailers, said it would add a consumer-to-consumer auction on the site it is developing in partnership with The Sports Authority. The auction, which will be set up on Sportsauthority.com, will enable consumers to sell sports-related merchandise directly to other consumers.
Global Sports and TSA plan to launch the site in the fourth quarter.